Techstars: What Worked, What Didn’t, What’s Next- Featuring David Cohen
Published in
5 min readJun 27, 2018
David Cohen of Techstars joins Nick to discuss Techstars: What Worked, What Didn’t, What’s Next. In this episode, we cover:
- What was the original vision for Techstars, when you started?
- How has that vision changed and evolved to where it is now?
- Techstars Ventures– any concern that it sends a bad signal for those cohort companies that the fund does not invest in?
- What does winning look like for Techstars? How do you measure success?
- Do you measure common VC fund metrics like TVPI, DPI, IRR, etc?
- Do you compare yourself against the other top accelerators? If so, where do you excel?
- Started Techstars Anywhere in 2017, first full class in ’18… How does one run a remote accelerator w/ the same quality of an in person one?
- I’m going to put you on the spot here– some founders do not have a positive experience going through Techstars or other accelerators for that matter. What type of founder is the program a great fit for and what is it a poor fit for?
- I’ve noticed a focus both from you and Techstars on Mental health and wellness– what are your thoughts on this area as an opportunity for startup innovation?
- How about the Cannabis industry. You’re based in Boulder– what are your thoughts on the sector and opportunity for founders?
- Do More Faster is one of the must-have books for every founder. Super pragmatic, actionable insights. What lesson or piece of advice doesn’t appear in the book that, now in 2018, you’d add as a critical item for founder’s to appreciate as they go through their journey
- Techstars’s FounderCon Europe 2018 was less than 2 weeks ago– What would you say is the biggest difference you’ve found when working with European startups vs ones in the US?
- What do you think Techstars looks like in five years?
- How do you balance time spent between companies that are succeeding vs. those that are failing?
- If you were to do it all over again, what would you change?
- What have you learned most about yourself through your experience at Techstars?
Insights from the Interview:
- The initial vision for Techstars was to a) improve the entrepreneurial ecosystem in Boulder and b)find a better method of angel investing.
- Over time, the vision has expanded to a forming a global network of entrepreneurs, investors and programs.
- Techstars currently has 40 accelerator programs across 13 countries
- In the early days, startups got $12k-$18k when admitted to the program. Today that number is $120k.
- The structure, mentorship and cohort model is largely unchanged.
- The fund is integrated with the accelerator. It invests in every cohort company. In terms of follow-on, they have a co-investment approach, investing in graduates that have an institutional lead.
- With Techstars rapid growth and increased mentorship, they now source 5% of Series A in the US.
- What started as an accelerator program alone has now expanded to a committed venture fund and event-series including over 1000 events per year.
- Many of the world’s best startup companies grow up in SF or Boston but are actually started in smaller cities with few investors.
- 11% of all Series A’s in the US come through one of the top three accelerator brands. Techstars and YC each account for 5% and 500 startups accounts for ~1%.
- In the Accelerator space, Techstars’ differentiation is its global focus. Their 40 MD’s live and work in emerging markets and have passion to build the entrepreneurship community there.
- Techstars culture is to give first, be helpful, don’t have an expectation of return.
- Techstars anywhere, a remote program, started in 2017 and ran their first full cohort in 2018.
- Entrepreneurs who cannot come to the US due to family, health, or immigration complications opt into the ‘Anywhere’ program.
- Anywhere program companies do have in-person experiences at the beginning, middle and end of the program.
- Founders who come into the accelerator with unrealistic expectations, such as guaranteed funding, will come out of the program unsatisfied.
- The ‘Equity Back Guarantee’ allows founders to take equity back at the end of the program. This happens 1.5% of the time. Often this applies to startups that expect to get a deal with a corporate partner, affiliated with the specific program, that ultimately do not get a deal.
- Utilizing machine learning for Mental Health and Wellness is an untapped market.
- Techstars runs a program called ‘Fail Club’ that any founder can plug into if they have a fear of failing.
- Techstars has not done much investing in the Cannabis industry. They stay away from founders completely focused on Cannabis although have done some investing on the edge.
- There are more dispensaries than Starbucks in Colorado, by a wide margin.
- A Lesson that David would add to his book, Do More Faster, is that not everyone should raise Venture Capital; it is for a select group of founders and many should leverage other resources such as university and government grants.
- Outside the US, it is considered “classically arrogant” for founders to be direct and straightforward with VCs.
- In places, such as Dubai, it is too aggressive for founders to lead with accomplishments. They must lead with humility and what the impact they’re trying to have in the world.
- Going forward David thinks Techstars will have more diversification of their products, more global reach, across more countries and they also may participate more at later stages.
- Contrary to the belief of cutting losses to focus on winners, Techstars uses their ample resources to continue helping entrepreneurs who are struggling.
- If he could do it again, David would have more “ringers.” He noticed competitors that found successful startups and gave them a deal in order to add their logo to the accelerator and tell some good stories.
- Techstars had the first accelerator-backed company to go public, Sendgrid in 2017.
- David Cohen focuses on strategy and David Brown executes.
- A key lesson that he’s learned as CEO of Techstars is that there is often not a “forever CEO.” There may be a startup CEO, a scaling CEO and an IPO CEO.
- Much of the VC Industry is about being showy. Many of the loudest, most hand-wavy folks with the bright shiny object are good at attracting LPs and entrepreneurs. David is the shut up and perform type.